Moody's changes BAE outlook to positive

Moody's Investors Service said it changed the outlook for BAE Systems plc to positive from stable and affirmed its Baa2 long-term issuer rating. Concurrently, the agency affirmed the Baa2 ratings of the senior unsecured debt instruments issued by BAE Systems, and the backed senior unsecured debt instruments issued by the company's subsidiaries BAE Systems Finance Inc. and BAE Systems Holdings Inc.

“The positive outlook reflects the robust nature of the company's program portfolio which is expected to remain stable or growing over the next three to five years, enabling the company to generate at least low- to mid-single-digit percentage growth in EBITDA. The outlook assumes that the company's organic revenue growth rates will improve over the next 12-18 months as supply chain pressures start to ease,” Moody’ said in a press release.

The agency noted BAE cut its Moody’s-adjusted leverage to 2.7x at June 30 from 3.4x at Dec. 31 aided by its trading performance, a supportive financial policy and a £2 billion reduction in the company's pension-related accounting deficit, reflecting higher discount rate assumptions applied to calculate pension liabilities.

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